Jose ugaz strathmore law kenya lecture 15 july

STRATHMORE UNIVERSITY SCHOOL OF LAW José Ugaz Chair, Transparency International

ILLICIT FINANCIAL FLOWS IN FIGURES

• Illicit financial flows leaving developing countries over the last decade is estimated at six trillion dollars • It is getting worse: Increase at an average rate of ten per cent per year • One trillion dollars of illicit outflows in 2012 alone That amount would be enough to realise the development goal of ending all preventing child deaths many times over

AFRICA’S MINERAL WEALTH A PARADOX

• Africa has 54% of the world’s platinum, 78% of its diamonds, 40% of its chromium, 28% manganese • At the same time it has some of the worst human development indicators • Resource curse

WHAT THIS MEANS FOR COUNTRIES SOME EXAMPLES WHERE DID THE MONEY GO? NOT TOWARDS COUNTRIES’ DEVELOPMENT

• $1 billion of mineral wealth exported from DR Congo in 2006: the treasury received just $86,000 from mineral rights.

• Nigeria’s own corruption agency estimates that $300 to $400 billion of oil money stolen/wasted over the last 50 years.

• In Liberia, 20% of the ministry of health and social welfare’s budget went missing in 2009, according to a government report.

• A study tracking money intended for rural health clinics in Chad found that only 1% actually reached its intended destination.

OTHER COMPONENTS OF IFFS ILLICIT TRADE & TRANSFER PRICING

• Illicit trade in natural resources, estimated at 650 billion dollars • Transfer pricing: Developing countries lose 160 billion dollars per year to tax evasion by multinational companies.

WHAT HAPPENS TO THIS MONEY?

• Assets stolen by corrupt leaders and moved to offshore accounts is estimated at 180 billion dollars.

Only 5 billion dollars has ever been returned

LINK TO GRAND CORRUPTION WHAT DOES IT MEAN? WHO DOES IT INVOLVE? • People in power • Impact on basic human rights • Huge amounts of money

CASES OF GRAND CORRUPTION

IMPUNITY FOR GRAND CORRUPTION WHY IS IT SO WIDESPREAD?

• The opacity of the international financial architecture Sophisticated money-laundering apparatus Shell companies

• Barriers to international cooperation Not enough cooperation of foreign jurisdictions Time & costs

WHAT CAN BE DONE? STOPPING ILLICIT • International Conventions United Nations Convention against Corruption FINANCIAL FLOWS African Union Convention on Preventing and Combatting Corruption AND ENDING OECD Anti-Bribery Convention IMPUNITY FOR • Closing legal loopholes GRAND • Preventing illicit flows with good CORRUPTION governance Good Governance goals as part of the Sustainable Development Goals, including a target on reducing illicit financial flows

• Uncover beneficial ownership • Country reporting • Justice and people pressure

TRANSPARENCY INTERNATIONAL’S PLANS • Civil society also has a role to play here THE CORRUPT WILL NOT BE ABLE • Transparency International’s Grand Corruption effort to end impunity and TO GET AWAY achieve justice WITH THEIR Recognition of Grand Corruption as an international crime CRIMES ANY • Exposing and unmasking the corrupt LONGER.

• Pursuing justice: investigations & litigation of corruption cases • Spreading the message through campaigns

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